Senate committee advances change to oil-and-gas tax trigger, extending time to spend plugging funds

The Senate Energy, Industry and Mining Committee voted to report an engrossed committee substitute for House Bill 53 98 to the full Senate with a recommendation that it pass as amended. Committee counsel said the bill would change the statutory test that temporarily reduces the severance tax on marginal oil and gas production from 2.5% to 0 by moving the date the abandoned well plugging fund balance is checked from June 1 to Sept. 1.

Counsel told the committee the substitute also clarifies that the fund may exceed $6,000,000 only if every dollar above $6,000,000 is encumbered under a binding, executed contract to plug specific wells with terms not exceeding 12 months, and it adjusts reporting and an overall cap referenced for administrative notice. The committee adopted a strike-and-insert amendment described by counsel and then approved reporting the bill by voice vote; the chair declared "the ayes have it." (Vice chair moved the motions.)

Jason Harmon, testifying for the Department of Environmental Protection, said the abandoned well plugging program historically relied on a $150 permit surcharge that fell as permit volumes declined and that additional state funding added since 2020 has dramatically increased plugging activity. Harmon said the agency estimates at least 6,300 orphaned wells in the state and reported that in calendar year 2025 the program plugged 94 wells with state funds. He told senators that funds awarded under contract may remain on the books until work is completed, invoiced and paid, explaining the practical reason for moving the balance-check date to Sept. 1: "when we receive more money than expected in October and have to have it all spent by June, it puts a lot of pressure" on completing contracted work.

The committee adopted a title amendment before adjourning the item. The committee record shows adoption by voice votes; no roll-call tally of individual votes was recorded in the transcript. Next steps: the bill will be considered by the full Senate with the committee’s recommendation that it pass as amended.